On Tuesday, BP CEO Bernard Looney elaborated the company’s new environmentally-friendly targets for the next decade following its net-zero plan by 2050 announced in February.
BP’s oil and gas production is targeted to fall about 2 million boepd in 2025 and 1.5 million boepd in 2030, from 2.6 million boepd in 2019, the smallest production portfolio of global energy majors.
The company’s refinery runs would be slashed to about 1.5 million bpd in 2025 and 1.2 million bpd in 2030, compared to 1.7 million bpd last year.
These result targets are excluding Russia’s Rosneft, where BP owns a 19.75% stake. All would be achieved via active portfolio management and the halt of exploration in new countries.
“We want what remains of our hydrocarbon portfolio to be more cost- and carbon-resilient,” the company said.
Regarding low-carbon investments, BP will boost them to USD3-4 billion/year by 2025 and roughly USD5 billion/year by 2030 from the current USD500 million/year. Its spendings in hydrocarbons will fall to around USD9 billion/year by 2025, from 2019’s USD13 billion.
BP plans to establish an integrated portfolio of low-carbon technologies, including renewables, bioenergy, and early positions in hydrogen and carbon capture, use, and storage (CCUS). The company has also set a target to develop roughly 50GW of net renewable generating capacity by 2030, a 20-fold increase from 2019.
Also by 2030, the company would cut emissions by 30-35% from the levels in 2019. Emissions associated with carbon in upstream oil and gas production are set to go down by 35-40% while its products’ carbon intensity is scheduled to go lower by more than 15%.
BP is committed to returning no less than 60% of the surplus cash to shareholders via share buy-backs after its net debt is down to USD35 billion in order to soothe shareholder’s concerns regarding the company’s new direction and to mitigate the impact of the dividend cut. By the end of June, BP’s net debt was USD41 billion.
The company’s annual capital expenditure (CAPEX) will be between USD13-15 billion/year until the debt-reduction target is accomplished. Until 2025, it will be in a range of USD14-16 billion/year.
Between 2020-2025, BP will also increase USD25 billion by divesting some assets, including the announced deals that have not been cashed in.
BP planned the 2021-2025 balance and cash utilization with an assumption of an average Brent crude price at about USD40/barrel, meaning the average refining marker margin would be around USD11/barrel.
Reacting to the news, BP’s share price soared by 8% on the same day with its announcement to half its dividend and of a sizable loss in the second quarter.
